Patents Issued for Financial Services Inventions Up Sharply Since 2009

January 27, 2012

The Patent Office continues to issue patents for financial services inventions at much higher rates than in the past. The last two years have seen an especially sharp increase in the number of financial-services related patents issued.

For example, patents in classification 705/4, which is titled “Insurance” have increased from a rate of about 25 per year over the first five years of the decade to a rate of about 275 patents per year during 2010 and 2011. Similarly, patents in the classification 705/36R, which relates to “Portfolio Selection” have risen from an annual rate of about 35 per year at the beginning of the decade to an average of 440 per year over the last two years. The “Finance” classification (705/35) has seen a twenty-fold rise from about 50 per year to about 1000. The graph below shows the number of patents issued in these classes for the years 2002 to 2011.

The numbers of applications published in each of these classifications has increased only gradually over the decade, and cannot account for the recent uptick in issued patents. Some of this uptick is undoubtedly due to the Patent Office working through a backlog of filings under new new Director David Kappos. However, it also seems likely to be the result of an increase in the allowance rate.

Similar increases can be seen over the last two years for issued patents that include the terms “annuity,” “hedge fund,” “life insurance,” and “exchange traded fund” or “etf.”

Whatever the reason, patents for financial services inventions are being issued at rates several times what they were during the early 2000s. For a brief period after the Federal Circuit decision in Bilski, and after some negative non-binding comments by the Supreme Court, it looked as though patents related to financial services might be an endangered species. However, the last two years have represented a significant proliferation of such animals. Insurance companies and other financial services companies will do well to imitate “hard” industries by monitoring their own innovations for possible patentable inventions, and by performing freedom to operate searches before implementing new products in order to avoid patents owned by third parties.